I am always looking for a good deal, whether that means buying an extra box of Golden Grahams when they're on sale or pouncing on undervalued stocks. The idea that anybody would sell a stock for less than its worth may seem silly, but legendary value investor Ben Graham (no relation to the cereal) tells us, by way of allegory, how we can look out for these situations.

In The Intelligent Investor, Graham introduces readers to a wacky chap named Mr. Market. Mr. Market's game is to pay you house calls on a daily basis to offer to sell you interests in businesses he owns or to buy from you interests in businesses you own. Sometimes Mr. Market will show up at your door very excited and offer you premium prices for your holdings, while at other times he'll be inconsolably depressed about the future and will offer to sell you what he has for as low as pennies on the dollar.

So to find some of the stocks that Mr. Market is depressed about, I've turned once again to The Motley Fool's CAPS investor community. Each of the companies below had been given a five-star rating (the highest) by our community of investors just 30 days ago:


30-Day Return

1-Year Return

Current CAPS Rating

MVC Capital (NYSE:MVC)








j2 Global Communications (NASDAQ:JCOM)




Corning (NYSE:GLW)




Atheros Communications




Infinera (NASDAQ:INFN)




Safety Insurance Group




Data from Motley Fool CAPS as of May 12.

As the table shows, these stocks are all still very well-regarded by the CAPS community despite their underperformance over the past month. While these are not formal recommendations, they could be a great place to kick off further research. I'll even get you started with some thoughts on MVC Capital.

Why so blue?
As a business development company, MVC Capital lends money and expertise to small, up-and-coming companies. When the investors running a business development company (BDC) are savvy with where they put their money, shareholders can see some very solid returns.

However, the value of a BDC's stock is typically based on the net assets on the firm's balance sheet. This can be the dark side of BDCs for shareholders, since the valuation of assets is often done by the BDC's management team, and can be a very opaque process to outside shareholders.

As has been the case with other BDCs, such as Apollo Investment (NASDAQ:AINV) and American Capital (NASDAQ:ACAS), investors have shouted loud and clear that they do not trust management's assessment of the assets at MVC. Despite the fact that the firm reported its per-share net asset value (NAV) as $16.85 back on May 1, investors have let the stock fall to less than half that, effectively rolling their eyes at management and saying, "Yeah, sure."

And there may be good reason to be skeptical. At this time last year, MVC reported its NAV as $16.53, which would say that over the past year -- as the credit markets roiled, the S&P index fell more than 35%, and earnings dropped practically across the board -- the value of MVC's investments rose around 2%.

What the bulls say
But skepticism on CAPS? I don't think so. Of 1,020 CAPS members who have shared their opinion on MVC, only 11 expect the stock to underperform the market. Many of these bullish CAPS members have taken a similar stance to Northville, who weighed in back in February:

I'm placing my faith in [MVC portfolio manager Michael] Tokarz on this one. They currently have money to invest during this down market and have recently announced a partnership with several Chinese firms to invest in the China region. Currently trading for approx 1/2 stated book value (admittedly stated by MVC, not free markets), I like this as a long term play.

And while I may stand by my doubts about MVC's stated net asset value, the bigger question may be how much doubt is warranted. As I noted above, MVC's stock currently trades at less than half of the stated NAV, so either management has grossly overstated the value of the firm's assets, or Mr. Market has marked this stock down a bit too far.

So here's the question: Do you think the recent drop has created a good buying opportunity? Or will we find out that MVC's actual NAV is nowhere near management's claims? Let the community know what you think by heading over to CAPS and sharing your thoughts with the 130,000 members currently part of the community. Even if you'd prefer to pass on MVC, you can check out a couple of the other stocks listed above or any of the 5,300 stocks that are rated on CAPS.

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